Commentary: Mobile commerce - approaching $1 trillion and growing

Dec. 20, 2012

Each holiday season brings a new shopping trend, and this year it’s the dramatic rise of mobile commerce. Instead of braving the lines for door busters on Black Friday, consumers increasingly made their first holiday purchases from their tablets or smartphones through apps. Even on Small Business Saturday, an increasing number of retailers were able to accept mobile payments through apps or with mobile payment swipers, such as Intuit’s GoPayment or PayPal Here.

The 2012 holiday season is an unprecedented one for commerce on-the-go, and there are still seven shopping days until Christmas. In the first few shopping days after Thanksgiving, mobile commerce skyrocketed. eBay and PayPal reported a more than three-fold increase in mobile commerce and mobile payment volumes, and, according to a study by the Mobile Marketing Association, 50 percent of consumers plan to make a purchase this holiday season with their mobile device, either through mobile web, apps, or at the point of sale.

Not since the advent of the credit card has payment technology so significantly shaped American consumer behavior. Mobile commerce is redefining the way we conduct business, creating opportunities for small businesses and large retailers alike. The evidence is everywhere, from the food truck phenomenon to mobile cash registers in retail stores. Everything consumers need is at our fingertips—and that’s how we like it.

Some have argued that the adoption of mobile payments, either through an app or a swiper, might be hampered by consumers’ lack of trust, but that has proven to be unfounded. With the ubiquity of smartphones and tablets and the rise of apps to complete nearly every task, consumers have come to expect the convenience of mobile payments and have demonstrated their trust in mobile technologies.

Research confirms that growth in mobile commerce will continue long past the holiday season. According to a recent study by IDC Financial Insights, mobile commerce will likely top one trillion dollars in 2017.

And this is only the beginning. With a trillion dollar marketplace on the horizon, rapid innovation, and a growing consumer base, mobile payment technologies, services, and users have a lot to look forward to in the years to come.

Research by the Application Developers Alliance and Frank N. Magid Associates found that one-third of smart devices owners have made in-app purchases. More remarkably, 16 percent have made purchases through a mobile card reader, and more are planning to do so over the next six months.

To better understand and optimize the mobile payments business, the Application Developers Alliance recently launched a working group comprised of mobile payments providers, tools, and mobile app publishers. On behalf of PayPal and the group’s co-chair Intuit, we are excited to lead this group and look forward to working with some of the most innovative app publishers in the business. Our goal is to shape the industry in a way that benefits developers and businesses and, most importantly, meets consumer demand for on-the-go and instant commerce. In a few years' time, perhaps our holiday gift to consumers will be the extinction of checkout lines.

Praveen Alavilli, developer evangelist for eBay Inc.'s X.commerce, is the chair of the Application Developers Alliance Mobile Payments Working Group.